Building companies appear to be caught between a rock and a hard place as costs keep rising while the volume of work available keeps falling.<\/p>\n
According to QV’s latest CostBuilder report, the average residential build cost per square metre increased 1.6% over the three months to the end of May this year, and 2.4% over the 12 months to May.<\/p>\n
Non-residential build costs, which includes commercial buildings such as shops, offices and warehouses as well as public buildings such as hospitals and schools, rose 1% over the three months to May, and 1.8% annually.<\/p>\n
However, there was also a surprising ray of sunshine in the report, which noted a substantial drop in the cost of diesel.<\/p>\n
Diesel is a major cost for work involving heavy machinery, such as excavation work.<\/p>\n
The report found diesel prices declined 18.9% over the month of May, albeit from a high base, but bringing some relief for those trades dependent on it.<\/p>\n
That drop in diesel prices resulted in excavation costs declining by 5.1% in May, while the costs of piling work declined by 0.9% for the month. However, the drop in the diesel price was not enough to offset rising costs in other areas.<\/p>\n
Some of the biggest price increases were for plumbing pipework, with polyethylene pipework prices rising 25.0% last month, while PVC drain, waste and vent pipework costs were up 21.6%.<\/p>\n
Other components facing substantial price increases were cedar cladding up 21.0%, fibre cement cladding up 4.8% and ready mixed concrete up 4.1%.<\/p>\n
“The steep price of fuel has obviously been the most pressing issue in recent months,” QV CostBuilder spokesperson and quantity surveyor Martin Bisset said.<\/p>\n
\u00a0“We’ve seen some of that pressure ease now, but diesel is still significantly higher than it was earlier this year and it remains highly volatile,” he said.<\/p>\n
“The broader picture is still one of modest cost growth overall,’\u00a0Bisset said.<\/p>\n
“Some costs have come back, but materials such as concrete, timber, cladding and pipework are still moving higher.”<\/p>\n
“Anyone planning a build should allow for some movement in costs. Even modest increases can make a difference over the life of a project,” Bisset said.<\/p>\n
That is coming at a particularly difficult time for the building industry, with Statistics NZ estimating the amount of work being undertaking across the industry has been in steady decline for the last two years.<\/p>\n
Statistics NZ’s latest Value of Building Work report estimates the value of building projects commenced in the first quarter (QI) this year was down by 5.9% compared to Q1 last year, with both residential and non-residential building project starts in decline.<\/p>\n
You can read more about that here.<\/a><\/p>\n
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